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WATERY END

LEGAL

I once fell out with some contractors doing road works outside my house after my car was dented while they were moving their vast diggers up and down the street, writes Sue Lindsey. Quite apart from the squabble over whether they had done it or not, the garage produced the usual extraordinary estimate for undenting the dent. Eventually I sold the car, complete with dent. I don't think for one moment that the estimate bore any relation to the amount by which the garage knocked down the price it paid for the car. So what should I have asked the contractor for?

Reinstatement or reduction in value?

As usual, the answer is: it depends. The Court of Appeal's recent judgment in Aerospace Publishing v Thames Water (Judgment 11.01.07) shows how important the facts surrounding a loss are in working out the right answer.

Aerospace produces numerous specialist publications of the sort that feature on Have I Got News for You. It has produced several 'partworks' (the sort of thing that builds up into a reference book) with titles including Warplane and Take Off. These publications relied heavily on Aerospace's own 'truly comprehensive and historical' archive, including photographs and other reference material, collected over many years by the company's owner, Mr Morse.

The archive was stored safely in 57 filing cabinets and four plan chests until 3 July 2001, when Thames Water's nearby mains burst and ooded Aerospace's premises. Water made its way into the bottom three drawers of all the filing cabinets, damaging about 70 per cent of the archive.

Thanks to the Water Industry Act of 1991, Thames Water was strictly liable. But how much did it have to pay?

Reinstatement, depending on which party was right about the figure, was likely to cost £2.4 million or £3.2 million.

On the other hand, diminution in value was put at £1 million or £274,000.

The Court of Appeal applied the appropriate tests for such tort claims, as set out in a case called Maersk Colombo.

The claimant is entitled to the market value of the chattel, but if he intends to replace it and the market value is inadequate for that, reinstatement value may be appropriate.

The court had to grapple with the peculiar difficulties posed by the archive. It was neither a readily marketable asset, nor unique like a Picasso painting. Loss of a readily marketable asset will not normally merit reinstatement if a replacement can be bought at a lower cost. With a unique object, it may be reasonable to measure the loss by the reinstatement value, which can be assessed by looking at past auction prices for similar items.

But it was difficult to assess the market value of the archive. It would be impossible to buy a whole new one and any sale would have to be spread over many years to achieve the best price.

In deciding that reinstatement was the proper measure, the court took into account that the archive had greater value to Mr Morse than its market value, and that he intended to reinstate it.

Aerospace's readers, who complained when the ood interrupted the partwork World Aircraft Information Files, will doubtless be delighted.

Sue Lindsey is a barrister at Crown Office Chambers in London. Visit www. crownofficechambers.com

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